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Colorado pitches new rules to cut oil and gas industry air pollution

Weld County is leading a state boom in oil and gas drilling. Colorado now has more than 50,000 oil and gas wells. (RJ Sangosti, The Denver Post file)

State health officials rolled out groundbreaking rules for the oil and gas industry Monday to address worsening air pollution, including a requirement that companies control emissions of the greenhouse gas methane, linked to climate change.

The rules would force companies to capture 95 percent of all toxic pollutants and volatile organic compounds they emit.

This would cut overall air pollution by 92,000 tons a year — roughly equivalent to taking every car in the state off the road for a year, state health chief Larry Wolk said. Such reductions could help bring Colorado's heavily populated Front Range, where smog and ozone are on the rise, back into compliance with federal air quality standards.

No state has adopted rules directly limiting methane emitted by oil and gas operations. Federal government and United Nations authorities are developing rules to try to reduce such emissions because they are a large factor in global warming.

"These are going to amount to the very best air quality regulations in the country," Gov. John Hickenlooper said.

He credited executives from Anadarko, Encana and Noble Energy — the state's largest producers — for compromising and helping minimize environmental harm from drilling before the cost implications are fully known.

"They understand it is a shared responsibility," he said, "and they have really stepped up."

• Detect leaks from tanks, pipelines, wells and other facilities using devices such as infrared cameras.

• Inspect for leaks at least once a month at large facilities and plug leaks.

• Adhere to more stringent limits on emissions from equipment near where people live and play.

• Use flare devices to burn off emissions from facilities not connected to pipelines.

Noble Vice President Ted Brown said the prescribed practices are "the right thing to do" but added that "it's a tough rule."

He and counterparts from Anadarko and Encana said they support the proposed rules as a way to operate more safely and build public trust.

"Regulatory certainty is important to the company, and doing the right thing also is important to the company," Encana's Lem Smith said. Reducing industry air pollution will bring a "quantifiable environmental benefit."

Colorado Petroleum Association president Stan Dempsey questioned the state's authority and the need for new rules. Regulation of industry air pollution might better be done through the state's overall air pollution control program or by the Colorado Oil and Gas Conservation Commission, he said.

The COGCC, part of the state Department of Natural Resources, has a dual mandate of promoting and regulating the industry and has been the primary overseer after contentious rule-makings over where wells can be drilled and protection of groundwater.

But state air pollution control division director Will Allison said statutes give the state's Department of Public Health and Environment the authority to regulate hydrocarbons. "Volatile organic compounds are one type of hydrocarbon. Methane is another type of hydrocarbon."

An industry study estimated the costs related to the new rules, assuming monthly inspections for leaks, could reach $80 million a year. A CDPHE study estimated costs at $30 million.

"I am very concerned that the costs — especially for small and midsize operations — will be quite significant," said John Jacus, an attorney who represented five companies in CDPHE stakeholder sessions.

Environment groups, led by the Environmental Defense Fund, helped craft the proposed rules.

"First in the nation, direct regulation of methane from oil and gas production facilities is a big, exciting step forward," Conservation Colorado director Pete Maysmith said.

Around the nation, state regulators have not dealt comprehensively with increasing air pollution from the oil and gas industry — a challenge as companies ramp up domestic energy production. And, when it comes to emissions of methane, the industry is largely unregulated, even though state data show oil and gas operations are a major source.

C
olorado's political landscape for oil and gas development has been toughening, however, with voters in four cities passing moratoriums and a ban on operations inside city limits.

The new air rules, to be hashed out at formal hearings in February, do not include a proposal to raise the threshold of air pollution above which companies would have to obtain permits from the state — 4,000 this year. State health officials had proposed reducing their administrative workload by raising the reporting threshold to 25 tons of air pollution per year from 2 tons to 5 tons.

But state officials dropped the effort because the "messaging" to residents would be difficult, Allison said.

"It was going to distract from the overall process," he said. "We want the focus in this rule-making to be on emissions reduction."